Rogers Communications loses cell tower lease over move to sub-lease space to a third party

A Nova Scotia forestry company leased land to Rogers Communications for a cell tower.  The original 1988 lease was renewed several times and provided that renewals would be "upon the same terms and conditions" as the original lease.  In 2012, Rogers asked for the lessor's consent to a "co-location" agreement where Rogers would sub-lease space on the tower to a third party.

Although no agreement was reached and no consent was given, Rogers went ahead with the co-location arrangement.  The lessor sought a declaration from the Court that the lease was terminated as a result of Rogers' failure to obtain consent.  The lessor also sought damages.

In court, there was a dispute between the parties over whether the lease had been renewed in 2012 for a further five-year term.  Rogers argued that it had given notice as required by the lease to renew under the same terms and conditions and, therefore, it was entitled to the renewal of the lease (which would be more or less automatic as long as Rogers exercised its option to renew).  The lessor, on the other hand, contended that Rogers' proposed renewal amounted to a counter-offer (which it rejected).  The proposed renewal lease included the co-location arrangement and additional rent as compensation for the addition of a sub-tenant to the tower.  Rogers took the position that it was its right to include the additional provisions in the renewal.

The Court determined that the lease had not been renewed and ordered Rogers to vacate the lands within 8 months of an order to be issued setting out the terms of the decision.  Also, the lessor was awarded any rent not paid during the period after the lease had terminated.

The Court then proceeded to consider the lessor's request for damages for breach of contract, breach of duty of good faith and trespass.  The Court ruled that Rogers did not have the right under the lease contract to allow a third party to sub-let or co-locate - the lease provided rights to Rogers to erect, maintain and operate its tower, but it did not allow it to host a third party's services.  Also, the Court noted that Rogers had sought consent from the lessor to allow the co-location.  The lessor was awarded the sum of $3,000 in rent for each year in which the third party co-located on the tower.

Read the decision at: Atlantic Star Forestry Ltd. v. Rogers Communications Inc.

Alberta Court upholds denial of crop insurance on basis of false or misleading reporting

The Alberta Court of Queen's Bench recently dismissed an application for judicial review of a decision by the appeal committee related to Alberta's crop insurance program.  The regulations that govern crop insurance provide that the decision of the appeal committee is final and binding on the parties; only a challenge to the decision by way of judicial review is possible.

In this case, crop insurance denied claims by a farmer for its 2009 canola crop, its 2009 Canadian Prairie Spring wheat crop and its 2010 Canadian Prairie Spring wheat crop.  Crop insurance declined to pay the benefit to the farmer on the basis that the farmer's post harvest assessments were incomplete and inconsistent with actual crop production.  On the appeal of this denial of coverage, the appeal committee decided that credibility was an issue.  The committee found that where there was a conflict in the evidence between the farmer and the crop insurance witnesses, the evidence of the crop insurance witnesses was to be preferred.  The committee cited examples where the farmer under-reported grain sales or was not forthright about grain sales until confronted with third-party documentation obtained during the crop insurance investigation.  The committee, which consisted of five farmer members, was left with the impression that the farmer "had not been honest and forthcoming in his dealings with AFSC during the claims process and subsequent contact with Program Cross Compliance and Investigation, despite several opportunities to make full and honest disclosure of the production and sales of crops."

The Court ruled that the standard of review applicable to this judicial review was a standard of reasonableness: if the Court found that the appeal committee's decision was "reasonable", then the decision would stand.  On review of the record from the appeal process, the Court concluded that the appeal committee's decision was, in fact, reasonable, and denied the judicial review application on that basis.  In particular, the Court found that it was abundantly clear that the committee had found evidence of false or misleading reporting from the farmer.  The Court could find nothing unreasonable about that conclusion and the denial of the crop insurance claims.

Read the decision at: F Prins Potatoes Ltd v Agriculture Financial Services Corporation.

Drainage Tribunal orders landowners to pay municipality nearly $50K in costs

The following summary of a recent decision of the Agriculture, Food and Rural Affairs Appeal Tribunal says it all:

"This Drainage Act appeal was unusual. Firstly, the quality of construction of the drainage works was challenged in circumstances where the drain was performing exactly as designed. Secondly, the Appellants’ case lacked any reliable evidence to support their challenge. Thirdly, the Appellants pursued issues that were outside the Tribunal’s jurisdiction, and did so contrary to the Tribunal’s directions.  Fourthly, the appeal was devoid of merit, and in effect frivolous.  Fifthly, shortcomings and the mounting costs were called to the Appellants’ attention before and during the hearing on more than one occasion. Sixthly, these same Appellants had previously pursued a quality of construction appeal on the same drain that another Tribunal Panel determined was unwarranted and, subsequently ordered these same Appellants to pay costs. Despite all that the Appellants pursued a costly and unsuccessful appeal hearing and want their neighbours or the taxpayers of the Municipality to pay for it.

In the circumstances of this case and for the reasons explained, the Tribunal awards the Municipality the costs of the appeal fixed at $49,536.80."

It's pretty rare that the Tribunal awards any costs, especially in Drainage Act proceedings. This decision demonstrates that there is a line that can be crossed, following which parties to Drainage Act appeals may be liable to pay costs to the successful party.

Read the decision at: Coleman Municipal Drain 2013 (RE).

Lawsuits challenge railroad's authority to OK oil pipeline

Here is an interesting article from AP business writer, Josh Funk, about growing conflicts between railways and neighbouring landowners in the US over pipelines and pipelines royalties: Click here to read the article at PennEnergy.com.  Not all railways hold full ownership over the land beneath their tracks; so who has the authority to grant permission for a pipeline, and to whom is compensation payable?

No harm, no foul in gravel extraction lease case - Sask Court declines to terminate lease

In a Saskatchewan case decided last fall, the Court of Queen's Bench ruled that the tenant under a gravel extraction lease was not subject to termination of the lease for having missed a deadline to provide proof of insurance coverage.  A common term in commercial leases is that the tenant or lessee must maintain liability insurance in a specified amount and must provide proof of insurance on a periodic basis, often annually.

The contract in question in this case demanded that the lessee have insurance in place and that it provide proof of the insurance on or before December 30 of each year of the contract, failing which the contract would terminate.  In 2012, although the lessee had put the necessary insurance in place prior to December 30, 2012, an oversight resulted in a failure to provide proof of the insurance to the lessors until January 2, 2013.  On December 30, 2012, the lessors instructed their solicitors to send a letter purporting to terminate the contract, and they refused to accept the proof of insurance when delivered to their home on January 2.

The lessors argued to the Court that there was a clear breach of the contract - proof of insurance was due by a certain deadline and that deadline was missed.  The lessee argued that a breach of the contract required two joint failures - both a failure to have the insurance in place and a failure to deliver the proof of insurance.  In its reasoning, the Court assumed (for the purposes of argument) that there was a breach and then turned to consider whether it should grant relief from penalty and forfeiture under the contract pursuant to its equitable power under Section 13 of The Queen's Bench Act: "The court may grant relief against penalties and forfeitures and, in granting that relief, may impose any terms with respect to costs, expenses, damages, compensation and any other issues that the court considers appropriate."

The Court found in favour of the lessee on all three prongs of the test for granting relief: 1) the conduct of the lessee was a mere oversight - there was no suggestion of bad faith, but only "clerical ineptitude"; 2) the breach caused no harm - the insurance was in place; and, 3) the lessee would lose its significant investment in the property while the lessors would suffer no damage (other than to have to continue with their contract with the lessee).  On those bases, the Court granted summary judgment to the lessee and issued a permanent injunction against the lessors preventing them from terminating the gravel extraction lease by reason of the 2012 late delivery of proof of insurance.

Read the decision at: Elchuk v Gulansky.